Mich. appeals court finds law firm, attorney didn't commit malpractice

LANSING, Mich. (Legal Newsline) -- The Michigan Court of Appeals said in a ruling last week that a lower court was correct in finding that an attorney and his law firm did not commit malpractice by binding a company to a settlement agreement without its consent.

Defendant IGC Management Inc. appealed to the court following a final order entered Jan. 13, 2012 by the Oakland County Circuit Court, granting summary disposition to attorney Christian Hauser of Michigan law firm Frasco, Caponigro, Wineman & Scheible PLLC.

IGC retained Bloomfield Hills-based FCWS and Hauser to represent it in an underlying action to recover funds that should have been paid to it as a subcontractor but for the general contractor having absconded with the payments.

FCWS and Hauser also represented other unpaid subcontractors.

After the general contractor filed for bankruptcy, and the court determined that LaSalle Bank had a priority mortgage interest of more than $3 million against assets of $1.3 million, the circuit court ordered the subcontractors and the owners and financiers of the project to mediation to see if the subcontractors might be able to recover some of their costs.

FCWS and Hauser eventually negotiated an agreement settling all underlying claims in a 12-count second amended complaint.

All the subcontractors other than IGC assented to the settlement agreement, but IGC was held bound to the agreement by Hauser's signature despite that lack of assent.

FCWS and Hauser commenced this action against IGC seeking attorney fees for their representation, and IGC counterclaimed for legal malpractice.

The circuit court granted summary disposition in favor of FCWS and Hauser in both actions.

"The record does not support a finding of unfair dealing or bad faith," a three-judge panel of the appeals court wrote in its per curiam opinion.

"It shows that Hauser intended to sign the Settlement Agreement on behalf of all claimants except IGC, that he expressly and repeatedly informed the facilitator that he was not authorized to sign on behalf of IGC, and that he requested that the facilitator place a separate line on the written agreement for IGC which would remain unsigned."

The appeals court, in its April 16 unpublished opinion, said because there has been no judicial or "other formal determination" that FCWS attorneys engaged in unethical conduct at any point during their legal representation of IGC, the firm's legal fees are not subject to forfeiture.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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